Sustainability report

Transcription

1 Strategic report - Group Sustainability report The drive for sustainability underpins every aspect of Pennon s long-term environmental, social and economic strategy. As one of the largest environmental and resource management groups in the UK, the Group is committed to responsible business and operational practices, minimising its impact on the environment and having a positive effect on the communities it serves. provides high quality drinking water, together with effective waste water treatment for Devon, Cornwall and parts of Dorset and Somerset. is one of the leading UK recycling, renewable energy and waste management businesses. achievements 17 consecutive years without water restrictions; a reduction in interruptions; industry-leading leakage control; top quality drinking water Best bathing water quality results for seven years Improved customer service score and customer satisfaction levels Increased renewable energy technology solar PV and hydro power generation Further delivery of sustainable catchment schemes under Upstream Thinking programme One of the first water companies to introduce a social tariff Largest ever customer engagement programme carried out in support of the Business Plan to Two star rating achieved in the Business in the Community Corporate Responsibility Index 2014 Overall recycling volumes broadly maintained, with a sharp focus on quality leadership in recyclates traded Growing contribution to UK resource efficiency and 292 million further investment in recycling and recovery infrastructure Continued sector leadership with 152 sites accredited to ISO50001 standard Six closed landfill sites have now attained the Wildlife Trust s Biodiversity Benchmark 13.3 million provided by for environmental, amenity and community projects across the UK via the Landfill Communities Fund. 301 projects supported. 36 Pennon Group Plc Annual Report 2014

2 We are pleased to report our performance against our strategic sustainability objectives and KPIs. Objective: Manage Pennon Group as a sustainable and successful business for the benefit of shareholders and other stakeholders. As a well-managed and responsible Group, with sustainability driving its business strategy and at the core of its operations, we aim to deliver strong performance and lasting value for all our stakeholders. Our services and methods of operation are designed to provide clear community benefits and to protect and enhance the environment. In addition to our long-term investment performance, Pennon was pleased to have sustained its 2013 score (4.2 out of 5) in the FTSE4Good Index Environmental, Social and ratings assessment. Objective: Aim to ensure that all our business activities have a positive economic, social and environmental impact on the communities in which we operate. Pennon recognises it has a responsibility to contribute positively towards communities affected by our operations. In addition to investing in a high quality water and waste management service, we create local employment, use local supply chains, provide financial support to community projects and enhance the environment. Pennon Group and its subsidiaries support communities and charities within their operational areas and continues to provide substantial funding to environmental and community projects via the Landfill Communities Fund. and South West Water also both fundraise for their preferred charities: WaterAid, the Cystic Fibrosis Trust and Trees for Cities. Strategic overview Group Financial statements Pennon Group Earnings per share before deferred tax and exceptional net charges (pence) 2009/ / / (1) 40.3* 42.6 Pennon Group Charitable donations ( ) 2010/11 78, /12 73,992 74,998 29,881* Capital Investment ( m) Community support, sponsorship & donations ( ) 2010/ /11 79, / /12 79, ,301 90,921 Capital Investment ( m) 2010/ / Community support, sponsorship & donations ( m) 2010/ / * In October 2013 the Pennon Charitable Donations Committee was split into two committees, one operated by, the other by. The charitable donations amount allocated by each committee post October 2013 is included in the figure given in the Community support, sponsorship & donations bar charts for each company. (1) Restated for IAS 19 (Revised) 37

3 Strategic report - Group Sustainability report Continued Objective: Aim to ensure that all our business activities have a positive economic, social and environmental impact on the communities in which we operate. Economic impact The major investment has made in water and waste water services since privatisation has helped support regional economic growth. Key business sectors such as agriculture and tourism have directly benefited from the company s efforts to increase environmental protection (for example in areas such as bathing water quality), and the company continues to be one of the largest private employers and users of third party suppliers and contractors in the region. Recent studies show that supports more than 4,000 jobs in the regional economy, in addition to the 1,400 engineers, technicians, scientists, office staff and other skilled professionals in direct employment. The company has a growing apprenticeship scheme and is committed to support for education. In this has included playing a key role in the development of a new Devon-based University Technical College (UTC), which is set to open in In approximately 100 million of order value was placed with companies with a south west base. At the start of the current regulatory period adopted a mixed economy supply chain model, designed to use small specialist companies based in the region alongside larger contract partners. Through its supplier forum and other cross-company initiatives continues to encourage and promote a culture of innovation and sharing of ideas. The company also has stringent procurement policies in place to ensure that supply chain partners adhere to a shared vision of sustainable working practices and corporate responsibility. s investment programme totalling 1.5 billion in recycling and energy from waste facilities includes 292 million of capital investment in growth projects in and continues to create significant direct and indirect employment and training opportunities, including construction jobs and supply chain opportunities. For example s Trident Park ERF construction project in central Cardiff is generating jobs and investment in the capital city and the wider region. Latest statistics show that in an average of 565 operatives have been employed on-site each month. 35 permanent skilled roles are being created for which recruitment is underway. In addition 17.5 million has been placed with local companies for materials, plant hire and sub-contracted work and the local economy has benefited from an estimated additional 2 million to date. currently has seven ERF construction projects in progress. s infrastructure projects were listed by the UK Government as contributors to Britain s long-term plan for economic growth. A quarter of the 20 waste management projects, listed in the overall 36 billion planned investment in UK infrastructure, are being delivered by. s developing sustainable procurement policy and practice will further enhance the overall environmental and social benefits across the company s supply chain. 38 Pennon Group Plc Annual Report 2014

4 Social impact Through its integrated contracts and major projects, is able to demonstrate clear community benefits across the UK. For example in Glasgow continues to deliver education, training and local capacity building as an integral service element in addition to core recycling and waste management services required under a 25-year waste contract. Similarly, a full and ongoing assessment of community benefits is conducted for its major infrastructure construction projects. Recognising that improved awareness and perceptions of recycling, waste and resource management issues within businesses and households is vitally important in driving further the UK s recycling and recovery rates, and in attracting talent into the sector, continues to focus its proactive community sponsorship programmes on education initiatives. In particular in it has supported Science, Technology, Engineering and Maths (STEM) and environmental education initiatives. These include the Scottish flagship educational partnership with the Engineering Development Trust, GO4SET (Go for Science, Engineering and Technology). continues to operate or support 10 education centres across the UK, helping to promote better understanding and best practice in recycling and resource management. These centres welcomed 14,000 visitors from schools, colleges and community groups during the year. The company encourages employees to get involved in a wide and inspiring range of community projects in its areas of operation. This includes match-funding of employee fundraising efforts as well as a wide programme of sponsorship and support for projects and events in local communities. The company was pleased to provide 178,000 of direct community sponsorship and charitable funding in. continues to provide funding to a broad range of amenity, community and environmental improvements projects across the UK via the Landfill Communities Fund. In provided 13.3 million, supporting a total of 301 projects. It is estimated that these projects benefited some 218,000 people. Funding is distributed via Credits, an independent Environmental Body. Strategic overview Group Financial statements Recognising that affordability is one of its customers key concerns, South West Water has continued to develop its range of affordability initiatives, partnering with consumer organisations such as the Citizens Advice Bureau and Age UK to provide advice and support. In 2013 the company was among the first in the industry to launch a social tariff and a pilot scheme was launched alongside local social housing providers to offer targeted assistance to low income tenants. has also frozen prices for 2014/15 and pledged to reduce bills by up to 13% in real terms by seeks to have a positive impact on the communities it serves. This includes the steps it takes to minimise the disruption or disturbance caused by construction activities (for example the repair or replacement of sections of water and sewerage mains). In 2013 a successful example of this was the handling of a major water mains replacement scheme in Newton Poppleford, Devon. This generated positive local press coverage. Beach cleans and habitat management were among the activities carried out by staff as part of the employee volunteering programme. The company also continued to promote and support the health and recreation opportunities available at reservoir sites across the region, including those managed on its behalf by South West Lakes Trust. In addition to its apprenticeship scheme, continued to support education through the provision of talks and materials to local schools, work experience, placements and giving lectures at the regional universities. Case study Stepps Park, Glasgow, a popular park in Stepps, near Glasgow, has been transformed due to the efforts of the Friends of Stepps Park. Consultation with regular park users informed the design of the park, with a strong emphasis on inclusion of all members of the community. An award of 101,000 from Credits helped towards new play equipment, seating, access and drainage. Case study Meeth Quarry, a man-made quarry, has been given over to wildlife indefinitely due to an award of 590,000 from Credits. The award enabled Devon Wildlife Trust to purchase the site with the aim of protecting the ecology of the site as well as opening it up to the public for the first time. 39

5 Strategic report - Group Sustainability report Continued Environmental impact In recent years has adopted a holistic approach to protecting the environment. Alongside investment in the maintenance and improvement of its infrastructure, this includes work to identify and pioneer ecologically sensitive sustainable solutions, often in partnership with other regional agencies and organisations. In the company continued its award-winning Upstream Thinking programme of catchment management, which is designed to improve natural water quality and water storage in the landscape. In early 2014 a study by Exeter University recognised the significant progress made by the Exmoor Mires Project (part of the wider Upstream Thinking programme), noting how the peat bog restoration is successfully improving water quality while also improving carbon retention. Additional environmental benefits of such work include reduced enhanced biodiversity, with several of the restored sites now recognised as habitats for rare species of bird and insect life. The project is also reducing flood risk. A similar philosophy is at the heart of South West Water s new Downstream Thinking programme, which is designed to help tackle waste water issues such as sewer flooding and pollution through ecologically sensitive soft engineering schemes, Sustainable Urban Drainage schemes (SuDs), habitat management and the targeting of misconnections. In the company carried out planning activity ahead of the roll-out of the first pilot scheme in Cornwall in the 2014/15 financial year. The region s bathing water quality reached its highest standard in seven years with 99.3% meeting or exceeding the minimum EU standard and 91% meeting the tighter EU guideline standard. remains committed to investing in the maintenance and improvement of its waste water treatment assets and networks in order to meet existing and emerging legislation. This includes the revised Bathing Waters Directive which comes into force in Compared with the previous year, 2013 saw a rise in the total number of pollution incidents and the number of harmful pollution incidents (Categories 1 and 2). While this is disappointing, this year s performance should be seen in the context of changes in the scope of reporting and the steps South West Water has taken to increase its capacity to monitor, identify and self-report pollution incidents when they occur. With regard to its carbon footprint, South West Water successfully met its target of keeping emissions at a level lower than that of the baseline position at the start of the current investment period. The company also expanded its use of renewable energy. This included two hydro generation schemes and the installation of a solar panel array at the company s Exeter-based headquarters its largest solar installation to date. is responsible for the management and stewardship of substantial landholdings, including 27 closed landfill sites, 19 operating landfills and five Sites of Special Scientific Interest. These landholdings (particularly closed landfill sites) can have significant benefits to plants and wildlife. In order to better understand the potential of these sites the company carries out detailed ecological assessments, leading to the development of Biodiversity Action Plans on key sites, to enhance habitats and species of national importance. At these locations works in partnership with the Wildlife Trusts, local communities and employees to enhance amenity and biodiversity wherever practicable. has worked hard to manage and enhance biodiversity on its closed sites and six have now attained the Wildlife Trust s Biodiversity Benchmark standard. The next stage of roll-out is to start working on three additional sites in This maintains s position as industry leader in respect of the proportion of sites covered by the Biodiversity Benchmark. 40 Pennon Group Plc Annual Report 2014

6 Objective: Engage with all our stakeholders and foster good relationships with them. Pennon aims to be a good neighbour and liaises with its stakeholders in order to determine and respond to their priorities. Both subsidiaries are actively engaging with stakeholders via social media, developing their online presence to enable customer and community queries and issues to be raised and addressed in this way. In support of its Business Plan to 2020 carried out its largest ever programme of research and engagement with customers and stakeholders during. Designed to gauge priorities for future investment, the formal research element was supported by a regionwide multi-platform media campaign (including digital media). An independent panel comprising representatives from key consumer, business, environmental and regulatory stakeholder groups also helped ensure the plan achieved a sustainable balance of investment for the region. The WaterFuture Customer Panel played a key role in scrutinising and challenging s engagement activities and the resultant plans. When the plan was published in December 2013 it had achieved 84% acceptability and endorsement from the WaterFuture Customer Panel. Evidence of exceptional customer engagement was highlighted by Ofwat in its subsequent assessment. In preparation for the opening of the retail market to business customers in 2017, the company is successfully engaging with the business community through Source for Business. This offers an expansive and innovative range of supplementary advice and support services (for example dedicated account managers, water and energy audits and laboratory services) and products designed to improve water efficiency and ensure non-household customers get the best possible value for money. At a wider level, is taking steps to improve its communications with customers and stakeholders. This includes an increased use of digital media and a focus on improving the responsiveness of customer services. Strategic overview South South West West Water Water Group Group Financial Financial statements statements In its second year of participation was awarded two stars in the Business in the Community Corporate Responsibility (CR) Index 2014, a step up on its previous year s assessment. Developed in consultation with business leaders, the CR Index is a powerful tool that has helped leading companies drive progress on corporate responsibility for more than a decade. This year the evaluation criteria were stricter than previously. The CR Index is based on a detailed assessment in the key areas of Workplace, Marketplace, Environment and Community. Many of the company s achievements in these areas are outlined elsewhere in this section of the Annual Report. Within this framework continues to operate an open door policy at its facilities, encouraging visits and engagement with customers, community groups and interested stakeholders. The company again took part in the English Heritage Open Days, encouraging local people to explore s facilities. also continues to operate community liaison groups at its major facilities, including those under construction, to ensure active and open dialogue between the company and its stakeholders and regulators. 41

7 Strategic report - Group Sustainability report Continued Objective: Strive for the highest standards of health and safety in the workplace so as to minimise accidents, incidents and lost time. RIDDOR incidence rate per 100,000 employees Actual number of incidents was 3 2,008 1, * 243* A safe and healthy workforce will always be a top priority for the Pennon Group. RIDDOR incidence rate per 100,000 employees Actual number of incidents was 37 2,165 1,238 1,429* 1,197* The health and safety of employees is South West Water s foremost concern and the company has rigorous health and safety policies and procedures in place. Tragically, on 30 December 2013 there was an incident at Falmouth Waste Water Treatment Works which involved the death of a member of our waste water team. is committed to achieving a step change in its health, safety and welfare performance. It already has rigorous and comprehensive health and safety policies, procedures and systems in place and is now focusing on behavioural safety and a fully engaged culture to achieve this. A major review of health and safety management, systems and culture was launched in January 2014, and an HSEendorsed health and safety employee survey was conducted towards the end of. As the coroner s inquest to establish the material facts relating to the death has yet to take place, this incident is not included in our figures for RIDDOR (Reporting of Injuries, Diseases and Dangerous Occurrences Regulations). continually reviews its health and safety standards and makes improvements as necessary to ensure best working practice. In recent years this has The results will help inform action plans in this priority area for 2014/15. This work complements the HSE-published Waste Industry Safety and Health (WISH) Blueprint for Accident Reduction in the Recycling and Waste Industry (of which was an author). A revised health and safety strategy was also endorsed by the Board in January Regrettably an HSE Improvement Notice was issued to in October 2013 at its East included the introduction of an independent occupational health service and a third-party nurse-led absence reporting process. This supports the reduction of absence while providing employees with advice on specific medical issues. Kilbride Household Waste Recycling Centre relating to site layout and reversing vehicles. The notice was immediately actioned and complied with. HSE action is also pending in Scotland relating to an incident at Bargeddie MRF, which is likely to result in a prosecution. The matter, involving serious injury to an employee, has been fully investigated and corrective actions have been implemented. * From 2012 reportable incidents are reported on seven days absence; in previous years they were reported on three days absence. 42 Pennon Group Plc Annual Report 2014

8 Objective: Develop and motivate our employees, treat them fairly and ensure that they are fully engaged in all aspects of the Pennon Group s objectives. Pennon s success is fundamentally due to the quality and diligence of our employees. We recruit talented and committed people and provide training packages to equip them with the skills they need to deliver the Group s objectives. Both and are equal opportunities employers. Their employment policies are non-discriminatory and every effort is made to ensure that no current or future employee is disadvantaged because of age, gender, religion, ethnic origin, marital status, sexual orientation or disability. Employees are supported through a range of family-friendly policies and other benefits. Employees are also entitled to participate in Pennon Group all-employee share schemes. Any changes to policies are communicated and consulted upon in detail. Strategic overview Group Financial statements s People Strategy is designed to foster a culture of support, motivation and reward for staff. Comprehensive development programmes are in place at all levels of the business to encourage career development. These include management training initiatives and the GROW programme, which focuses on increasing business awareness and giving employees the tools and techniques for personal development. During the company also carried out a major upskilling programme for operational staff. The company prides itself on recruiting and retaining a highly skilled workforce and in its apprenticeship programme continued to gather momentum with 23 new recruits. Various internal schemes are in place to promote innovation and reward those whose performance has excelled. The Pure Awards, for example, are given to those who have made a significant contribution towards the company vision of delivering Pure Water, Pure Service and Pure Environment. The achievements, professionalism and commitment of its employees is a source of pride to. The company is continuing its transition from a traditional waste collection and disposal company into a sector-leading renewable energy, recycling and resources business. To do this it is creating a business that is future-fit, which means having a well-trained, skilled and engaged workforce along with excellent business processes and systems. The world s top-performing organisations understand that employee engagement is a force that drives business outcomes. Engaged employees help to drive safety, productivity, profitability and customer focus. As part of s renewed commitment to employee engagement, it will now be working with Gallup and using their well-known and established Q12 employee engagement programme, starting with the survey. Reflecting its ongoing focus on positive professional development and training, 245 employees are registered for the sustainable resource apprenticeship and the company currently employs a further 17 traditional apprentices. A full range of NVQs and other training qualifications is available to ensure the required levels of skills and expertise across the workforce. As part of its innovative partnership with Edge Hill University, s business leadership and management foundation degree course continues for its next generation of leaders. The first Degree cohort have completed the course and will graduate in July

9 Strategic report - Group Sustainability report Continued Pennon Group Plc greenhouse gas emissions Scope 1 1,223,568 1,200,591 Scope 2 143, ,528 Scope 3 60,080 57,493 Total gross emissions 1,427,126 1,401,613 Carbon offsets 0 0 Netted off renewable electricity export to grid up to total amount of electricity purchased and consumed by organisation (143,478) (143,528) Total annual net emissions 1,283,648 1,258,084 Biogenic emissions outside of scopes 936, ,425 Intensity measure: tco 2 e (gross Scope 1 + 2)/ 100,000 revenue 103 tco 2 e/ 100,000 revenue 112 tco 2 e/ 100,000 revenue Scope 1 (Direct emissions) Activities owned or controlled by our organisation that release emissions straight into the atmosphere, for example the combustion of fuels in company owned and controlled stationary equipment and transportation, emissions from site based processes and site based fugitive emissions. Scope 2 (Indirect emissions) Emissions released into the atmosphere associated with our consumption of purchased electricity, heat, steam and cooling. These are indirect emissions that are a consequence of our activities but which occur at sources we do not own or control. Scope 3 (Other indirect emissions) Emissions that are a consequence of our actions, which occur at sources which we do not own or control and which are not classed as scope 2 emissions. Notes Change in emissions Our GHG emissions increased between and largely as a result of additional fugitive emissions from our landfills. However our emissions intensity measure of tco2e/ 100,000 revenue decreased as a result of our revenue increasing at a faster rate than our emissions. In order to maintain emissions comparability between reporting years we have taken the decision to rebase our historical emissions following a recent change in the Government s methodology for calculating the emissions conversion factors associated with imported electricity usage. The Government s modification has resulted in an approximate 7% reduction in emissions from imported electricity (Scope 2 emissions) compared with the previous methodology and this has been significant enough to prompt us to rebase our reportable emissions. Organisational boundary The emissions listed here cover the Pennon Group of companies using the financial control approach. Operational scopes We have measured our Scope 1, 2 and some Scope 3 emissions where information is available. Intensity measurement We have chosen an intensity measure of Scope 1 and 2 gross emissions in tco 2 e per 100,000 revenue. External assurance statement Our greenhouse gas emissions data has been independently audited and verified for accuracy, completeness and consistency by an external assurance assessor. Carbon offsets We do not purchase any carbon offsets, instead we rely on self-generated renewable energy to reduce our overall emissions. Green tariffs/renewable energy export We do not purchase green tariff electricity; instead we can reduce our net emissions by exporting our self-generated renewable energy to other users. Our second methodological change is to remove biogenic emissions from our Scope 1 emissions and report them separately so that they are no longer included within our total gross and net emissions. This accords with the latest Government guidance on reporting emissions reductions such as those emissions that have their origins in biological matter. Methodology and approach We have followed the Government s environmental reporting guidelines for mandatory greenhouse gas emissions reporting published by DEFRA in June In calculating our emissions we have used the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (revised edition) and the web-based conversion factors provided by DEFRA. 44 Pennon Group Plc Annual Report 2014

10 Objective: Aspire to leadership in minimising emissions that contribute to climate change, and develop climate change adaption strategies In increased its capacity for renewable energy and continued to invest in the fine-tuning of its assets, systems and working practices in order to make them more energy efficient. Compared with its 2009/10 baseline, carbon emissions were successfully reduced and energy consumption was 2.4GWh lower than for the previous year. Since the start of the current investment period ( ) South West Water has improved the way it manages energy and emission levels through a combination of the following: optimising asset performance and refurbishing pump systems renewable energy generation new technologies (e.g. operating equipment and systems remotely under the PUROS* scheme) promotion of energy efficiency through the in-house Powerdown initiative. The company s holistic, catchmentbased approach to the management of water and waste water is also working towards a reduction in carbon emissions. This spans everything from the carbon capture in the restored peat bogs that have been developed as part of the Upstream Thinking initiative, through to the more general move away from a dependency on engineering and energy intensive schemes. * Phased Utilisation of Remote Operating Systems Strategic overview Group Financial statements Carbon management and energy efficiency are now well established disciplines within. During the year there was continued progress with the deployment of energy and water saving initiatives in line with the company s five-year carbon reduction and energy efficiency plan. This aims to reduce its overall fossil fuel related carbon footprint and improve energy efficiency by 20% (against a 2010/11 baseline). Through its energy recovery operations using residual and organic wastes as fuel, is a significant exporter of (largely renewable power generated) electricity to the national grid. The company s materials recycling operations also make a positive contribution towards helping reduce embodied carbon within supply chains (by replacing virgin materials in manufacturing). The largest source of Scope 1 GHG emissions as CO 2 equivalent tonnes are landfill gas fugitive emissions. These continue to reduce as capture rates improve (harnessing methane for power generation), landfill volumes reduce and the composition of inputs continues to change. Thermal emission increases with increased utilisation of ERFs will be more than offset by the decline in landfill emissions and emissions that would be otherwise generated by fossil fuel fired power stations to provide the same amount of energy. Although exports almost 12 times the amount of electricity that it uses from the national grid, it cannot net one off against the other for carbon reporting purposes. As an operator of a fleet of 650 collection trucks and 200 other company vehicles, the company also continues to focus on reducing its transport- related emissions through business and technical efficiency initiatives. These emissions reduced by 15% over the three years since Almost half of these reductions have been achieved in. The roll-out of the first phase of a company-wide LED lighting retrofit has been completed at 26 of s largest energy-consuming facilities. has shown continued sector leadership with the accreditation to ISO Energy Management Standard now at 150 of its sites. This represents 43% of the total certified sites (from all sectors) in the UK and 2% worldwide. 45

11 Strategic report - Group Sustainability report Continued Objective: Aspire to leadership in all aspects of waste prevention and resource efficiency. Renewable energy generation (GWh) 2010/ / Pennon is delivering solutions for society to address the environmental challenge of depleting natural resources by maximising the value of residual materials, transforming waste and improving energy efficiency. Recycling volumes (tonnes of dry solids) Recycling volumes traded (million tonnes) 2010/ /12 52,400 54,612 45,304 34, / / has successfully avoided water restrictions for 17 years due to its past investment in resources and its careful management of supplies. The company s water resource position is healthy and its strategy going forwards is to invest in ways to move water to where it is needed most rather than developing any new reservoir sites. South West Water continues to achieve industryleading leakage control and the company is taking steps to reduce the amount of time it takes for leaks to be fixed. This is being delivered, in part, through increased monitoring and investment in analytical technologies to better predict any issues on the mains. Today s business practices continue to largely rely on increasing resource consumption to create and drive economic growth. There is increasing pressure on resources such as minerals, metals and fossil fuels, and rising and volatile prices for materials and energy demonstrate the increasing risk of impending resource crunch. Addressing this and changing linear business models ( extract, make, consume, dispose ) requires the adoption of the business strategies of a more circular economy. The principles of this include higher levels of reuse and recycling, products as services, collaborative production and consumption, and renewable power generation and use. provides services in line with its stated purpose of giving resources new life. It provides essential waste prevention, recycling, resource management and renewable energy services With regard to waste prevention, South West Water recycles sludge using anaerobic digestion techniques to create a biosolid product for agricultural use. The company has also invested in creating energy from waste and currently has seven operational CHP (Combined Heat and Power) plants. Part of s long-term strategy is to further develop each of these activities. is also currently working with its supply chain partners to minimise the amount of waste on construction sites and make use of by-product materials such as rock, grit, plastics and other materials. In the past year this has included the recycling of excavated concrete at Radford Wastewater to its clients across all sectors. The company continues to identify and exploit economic and policy drivers and opportunities to deliver services contributing to greater resource efficiency and energy security. Despite ongoing price volatility for recycled commodities, broadly maintained the overall volume of material recovered for recycling at 1.8 million tonnes in (1.9 million tonnes ) while focusing on producing higher quality materials. Renewable power generation decreased by 5.1% to 778 GWh (from 820 GWh in ). The greatest contribution of renewable power was from 33 landfill gas power plants, followed by ERF plants and a modest contribution from AD plants and solar power arrays. The contribution from ERFs will increase significantly as five plants are due to become operational during 2014/15. commissioned an additional AD facility at Treatment Works in Plymouth and the use of recycled plastics at Ashford Waste Water Treatment Works, North Devon. In addition the company continues to take steps to reduce the amount of waste sent to landfill through the recycling and composting of grit and screenings (solid materials extracted in the early stage of waste water treatment). In particular grit is being used for land restoration activities at Park and Stannon reservoirs the former china clay pits (purchased for reservoir use in 2011) that is working alongside local authorities and conservation groups to restore. Walpole during and installed solar power arrays at Westbury closed landfill and at Lakeside EfW. A partnership between and Highview Power Storage was awarded over 8 million in February 2014 to spur innovation in storing energy. The contract to build and operate a 5MW energy storage demonstration project at a landfill site has been awarded by the Department of Energy and Climate Change. The company was also pleased to see the introduction of the Materials Recycling Facilities (MRF) Code of Conduct, introducing quality assessment criteria for output materials at all UK MRFs, during the year. has been leading the call for the introduction of such standards, and helped develop the protocols now required by all operators. 46 Pennon Group Plc Annual Report 2014

12 Programmes and performance contributing to the sustainability of the businesses are overseen by the Pennon Sustainability Committee and in the case of, its own sustainability committee. Details of the Pennon Sustainability Committee are given on page 67. The subsidiaries develop a range of targets as part of their business planning processes and monitor and report progress to their respective boards and to the Pennon and Sustainability Committees throughout the year. Verification Pennon s sustainability performance and reporting has been audited by Carnstone Partners LLP, an independent management consultancy, specialising in corporate responsibility and sustainability. and sustainability reports The full sustainability report for will be published in August and this year South West Water will be incorporating its sustainability reporting in its annual report and accounts which will be published in July. Both documents will be available to view at and also on the subsidiaries websites. Full details of the sustainability targets for and for, and their performance against them, are given in their respective reports. Strategic overview Group Financial statements 47